Cloud Gaming uses the latest streaming and server technology to enable everything from standard games all the way to high-end ones to run on just about any device.

With this you can release yourself from the console and take it to the cloud to game anywhere, anytime, on any device – smartphones, tablets or your normal work computer – and possibly from any game maker.

In other words, it works something like video streaming, but with games. No more worrying about the spec requirements to run a game. No more booting of a game that takes forever to setup or customize. No more error screens after waiting forever for the installation to be completed.

Cloud Gaming lets you skip all that and get to what is really important – the game itself.

The Rise of Cloud Gaming

The idea of cloud gaming over the Web was first introduced to the public in the 2009 Game Developers conference. OnLive demonstrated cloud gaming by streaming the game, Crysis over the Internet from a server miles away to be played on a low-end laptop. Users can stream games available in the OnLive store using OnLive’s own client. They were off to a good start gaining the attention of testers, game developers and investors.

In about three years later, OnLive started letting go of their employees. They can’t seem to make money from cloud gaming. They have thousands of subscribers but none of them are the paying kind since players can try out game demos on the OnLive store for 30 minutes, for free.

The company was reportedly spending $5 million a month to maintain thousands of servers that aren’t being fully utilized. At most, only 1,600 players were on it concurrently.

The company has since switched hands, and a new CEO has been elected. OnLive is now on a 12-month recovery plan but still offers a playpack of $9.99 a month for unlimited gamplay for over 200 game titles.

A Different Game Plan

Then, there is GaiKai, founded in 2008, a company which focuses more on selling their platforms to game manufacturers who wish to provide cloud gaming options to their players. The GaiKai platform is similar to how you stream netflix on your Smart TV. GaiKai allows white-label businesses with basically any manufacturer.

So if for instance, Samsung wants to have their own cloud gaming platform on their range of TVs, GaiKai will build it for them. They had a partnership with Electronic Arts and Ubisoft and was in the midst of making more mainstream games available on their platform. Then, Sony showed up and bought them. For $380 million.

Friend or Foe?

So what was the reason behind the massive buyover? Was it to actually add a new platform to their service, or to prep it for PS4 or their range of Sony smartphones? Or was it a way to stave off the competition from other tech manufacturers like LG or Samsung or even from GaiKai itself before it grows big enough to consume Sony and the rest of the traditional gaming industry?

There is a lot at risk here and Sony apparently wants to keep on top of things but we’ve yet to see them make their first big move with GaiKai.

Setting Up Cloud Gaming

With big players in the mix, why hasn’t cloud gaming taken over the world? Well, like all great ideas, there are still a lot of creases to iron out. Here’s a brief walkthrough of the problems companies who are investing in cloud gaming are facing:

The Cost

For gamers to be able to play everywhere, any time, cloud gaming service providers have to invest in getting the server technology (more on that later) to ensure smooth gameplay. This is why companies like OnLive provided three options: rent, purchase or subscribe, from $5 to $50 fees to game on the Cloud. The costs is only for the gaming experience, you need to bring your own Internet connection.

You need a minimum of 2Mbps (or the standard recommended speed of 5Mbps) for smooth gaming because with Cloud Gaming, you will be burning up about 1.3GB in an hour. Good luck asking the rest of the household to stop watching online videos while you slay monsters.

Lack of Players

New gaming platforms face a big problem that is pretty much out of their hands. When it comes to online games, players like to interact or compete with other players. Since cloud gaming is still relatively new and players already have their list of favorite games (and consoles) to burn the midnight oil for, if cloud gaming services cannot give them the option to play top-tier games, the crowds won’t come.

Change

It’s a change in a massive scale where the rules of how things work change. If cloud gaming takes over, there will be no more game stores since you need not pick up physical copies of your games anymore. The actual gaming experience itself will also probably change because instead of being able to invest in your gaming machine, gameplay must now depend more on your Internet connection and the servers hosting these games.

Latency And Hardware

Latency is the response you get from a game event that you send over the Web. For a fast-paced game like in the Multiplayer Online Battle Arena (MOBA) or First Player Shooter (FPS) genre, it will require you to have a latency of at least 350 milliseconds and below. Otherwise, there goes your in-game performance. When it comes to latency issues, two companies are working to get game performance in tip-top shape.

Faster Gameplay

CiiNOW is working on improving game response and lowering latency rates. So far, they are claiming that their network latency is 27% faster than GaiKai and 17% faster than the XBox 360. This means that you get better response times in your gaming environment when you play on the CiiNOW platform.

Hardware Performance

With Nvidia, the latency issue is considered a small one. The standard Xbox performance has around 150 – 200 milliseconds of latency. With cloud gaming, a tweak in the hardware department can easily bring the numbers down to 60 miliseconds.

Hence, Nvidia’s focus is more towards server technology, which they call Nvidia Grid. It features Hardware Virtualization: using a software called the Nvidia VGX Hypervisor, the physical graphic card can actually create and run a virtual graphic card within it.

With this technology, the Grid has the equivalent power of 720 XBox 360’s put together, running at only a fifth of the power. If you think thats a lot of firepower, you’d be right. GaiKai is working hand-in-hand with Nvidia to redefine cloud gaming.

Conclusion

Will Cloud Gaming be able to redeem itself? The prospects are bright and it will probably be a welcome boost to the gaming industry by making gaming affordable and more accessible to more players. When it will arrive is another matter. In the meantime, we’ll have to make due with buying new gaming consoles and chucking out the old ones.